Emerging marketplace

Market forces prompt embrace of planned giving by donors, charities.

By Todd Cohen

When internet-search-engine firm Google launched its initial public offering of stock last year, a professional adviser in California phoned the National Philanthropic Trust in Jenkintown, Pa., saying a company executive planned to make a gift of restricted Google stock to the trust.

Before it could accept the gift, worth about $500,000, the trust needed to secure approval from the company’s corporate counsel so the stock could be sold without restriction or violate Securities and Exchange Commission rules.

“A gift of restricted stock is not a check,” says Eileen Heisman, president and CEO at the trust. “It requires a lot of planning and research and background work.”

As wealth grows and the chase for donated dollars mounts in the face of rising demand for services, more donors and charities are looking beyond outright gifts of cash, creating an increasingly sophisticated breed of philanthropy known as planned giving.

The growth of planned giving, which typically involves deferred gifts though wills, charitable trusts or estate plans, and consists of non-cash assets such as stock, insurance, real estate or works of art, has fueled its own industry.

Fed by a growing number of academic and professional-training programs, that industry now employs an expanding corps of nonprofit professionals and personal financial advisers such as lawyers, certified public accountants, financial planners, trust officers and life insurance agents.

And while larger charities, colleges and universities can afford full-time planned giving officers or staffs, smaller organizations are beginning to launch planned-giving programs or hire for-profit firms to handle a range of planned-giving tasks.

Those firms provide planned-giving services ranging from marketing and consulting to fund administration, investment management, and software for calculating and illustrating planned gifts.

“There is an increased focus from the nonprofit community on planned gifts,” says H. King McGlaughon Jr., professor of philanthropic studies at The American College in Bryn Mawr, Pa.

Contributing to that heightened attention by nonprofits, he says, are banking, brokerage and insurance firms that, to meet growing awareness and demand for services from donors with shifting needs and interests, offer clients an expanding menu of planned-giving tools and techniques.

The reality of the marketplace also is fueling the growth of planned giving, says McGlaughon.

“The number of donors is relatively finite,” he says, “and as you ask that finite number of donors to give an increased total amount of gifts, you have to start looking at assets and gift strategies that allow the same donor to give more assets than he has in the past.”

At the University of North Carolina at Chapel Hill, for example, planned gifts are expected to account for 20 percent of the $1.8 billion the school is trying to raise in a capital campaign.

“The numbers we’re being asked to raise are very, very large,” says June Steel, associate vice chancellor for advancement services, “so we need to look at assets other than income.”

While planned giving “to many people still connotes gifts at death,” says Bryan Clontz, president of Atlanta consulting firm Charitable Solutions, “the planned-giving field over the past five years has done a much better job of creating more opportunities and capturing more assets for major gifts.”

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